# Petition for Writ of Certiorari — Chevron Chemical Co. v. Liberty Mutual Insurance > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_0611%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1973 - **Citation:** 414 U.S. 858 ## Text ne aaa FILE COPY IN THE Supreme Court of the United States OCTOBER TERM, 1973 No. 79-139 CHEVRON CHEMICAL COMPANY:- ORONITE DIVISION, Petitioner, versus LIBERTY MUTUAL INSURANCE COMPANY, MECHANICAL CONTRACTING ENGINEERS, INC. AND MR. WILLIAM F. COLE, Respondents. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT SG RRR Rs WHOIS MEA CROTIG A Shy ea aL SPU Ri RR PLAST FE AREY II RELAIS IE OE EO sh LLOYD C. MELANCON Counsel for Petitioner 720 Hibernia Bank Building New Orleans, Louisiana 70112 504 523-5116 MESSRS. McLOUGHLIN, BARRANGER, PROVOSTY AND MELANCON Of Counsel Hse Page MMR, |< - - <2 5 2 acs ncn c cc senecseesecoanseeeees 2 Opinions Below .............-------. 5 sees reer tees 3 Questions Presented for Review ...........-.-----:: 3 matement of the Case ............-..---5-- eee eeeees 3 Reasons Relied on for Granting the Writ of NR ras Se as i cee wake «eRe ae eee 5 Onc cua ae aied oN GS Be bane HOE 13 te ak ang Web ences new nea ee 14 IN 6c ner k aw ndn> wvwaeenevenst snes seanseeees la I. Louisiana Civil Code Article 1901 .......... la eo 8 Sl ee errs roe la i ee ccc sc ened ohare eines la IV. U.S.C.A. Title 28, Section 1254(1) .......... 2a V. US.C.A. Title 28, Section 1332 .............. 3a VI. July 30, 1971, Findings of Fact ............ 4a VII. Opinion with Respect to Indemnity Issues . .13a VIII. Opinion on Judgment Notwithstanding ES bes ahem rou digee sex oie 27a IX. Judgment - U. S. District Court .......... 35a X. Opinion of the U. S. Court of Appeals, ee Oe a alt hewn oe 39a XI. Judgment - U. S. Court of Appeals ........ 55a XII. Order of U. S. Court of Appeals Denying eB ree 57a SAAD 2S AA HNEL ARSE SAGAS a AG EA VERA Me PE SEIT LIED PIB ALE IEE EG EERE BALE AE pal pasa WILT. VGA BE EP v ii CASES CITED Page Arnold versus Stupp Corp., 205 So.2d 797 (1967). 12, 13 B & G Electric Co. versus G. E. Bass & Co., Inc., 252 F.2d 698 (1956), cert. den. 357 U.S. 931 10 Chaney versus The Travelers Insurance Com- pany, 249 So.2d 181 (1971) .........0.000........ ll Chesapeake and Ohio Ry. Co. versus Bailey Pro- duction Corp., 163 F.Supp. 666 (1958) .......... 10 Cole versus Chevron Chemical Company, 427 F.2d eR OPA re eda NT AO 5 Aine he RAMs 4 Cole versus Chevron Chemical Company, 334 F. SC TE CU ce ec ee ee rs es on oe 2 Despaux versus California Co., 286 F.Supp. 558 CSRS . Sa ar ee nee Ona eae UE 12 General Electric Co. versus Cuban American Nickel Co., 396 F.2d 89 (1958) .................. 12 General Talking Pictures Corporation versus Western Electric Company, Inc., et al., 304 MU era etn ee a ene ee eeeas 2 Goett versus Union Carbide Corp., 361 U.S. 340 __. IRBLAT eaat ane roy Why aes ORO Seo ap ne Ciatie a? aie TRE Ne A 2 Gonzales versus Pennsylvania RR Co. versus Imparato Stevedoring Corp., 183 F.Supp. 779 ERM Be PN get eh pO se i Bi Pome Malina, i met Seale peal he 10 Gorsalitz versus Olin Mathieson Chemical Corp., (5 Cir., No. 30631, September 28, 1971) .......... 12 Halliburton Company versus Norton Drilling Company, 302 F.2d 431 (1962) .................. x , streets : oe . ees . coop ascot piniles Book ee eS NN et CS ELE LIEBE NCEA BEAT ELIE OIE HOD LA IR. SB I ete Vie BY * Shyer es iii CASES CITED (Continued) Page Humble Oil and Refining Co. versus Naquin, 414 ee OU oo arta cu ca nce meen ee 11, 12 Jennings versus Ralston Purina Co., 201 So.2d I = eA ate US a meinen o5 11, 12, 13 Jewelers Mutual Ins. Co. versus Balough, 272 wut sea ee akan cae aneie as ll Keystone Tankship Corporation versus Willa- mette Iron & Steel Company, 222 F.Supp. 320 De rc rate aN a ie SAN peat ce RE TS Eo 9, 11 L. L. Bogle d/b/a Oil Field Maintenance Com- pany and Travelers Insurance Company versus The California Company, 369 F.2d 699 Se Ree Care ngua At le Pit, Ale wln! Sie et ne Seale ee 9 Ludwig Mowinckels Rederi versus Commercial Stevedoring Co., 256 F.2d 227 (1958) ............ 10 Mills versus Fidelity & Casualty Co., 226 F.Supp. 786, at 790 aff'd per curiam 338 F.2d 341 Ie AN ULE rae ee Ones ane pa re 12 Pure Oil Co. versus Geotechnical Corp., 129 F. ee I dee eka eee wenas: 10 Ryan Stevedoring Co., Inc. versus Pan-Atlantic SS Corp., 360 US. 196 (3061) .................. 10 Seneca versus California Oil Company, et al., ee I: Te CHD «oo osc oer sew eens: 9, 11 The Tungus versus Skovgaard, 358 U.S. 588 (1959) .... 2 U.S. versus Tieger, 138 F.Supp. 709 (1954) .......... 9 SO Se Se ras Sl Te oranda Le eet ete OO EE Ta iv CASES CITED (Continued) U.S. Fidelity & Guaranty Co. versus Wilson, 41 W2d SID (1980) 0... eee eee tence nes U.S. Steel Corporation versus Emerson-Comstock Co., Inc., 141 F.Supp. 143 (1956) ........--.----. 10 Union Pacific Railroad Co. versus Bridal Veil Lumber Co., 219 F.2d 825 (1955) ...........-.--. 10 United Gas Corp. versus Guillory, 206 F.2d 49 No loinc sna Rlen Gee Wen eaese eee sesh 12 White versus The California Company, et al., 250 F.Supp. 586 (1966) ......-.-.---.-sse eee 9, 10, 11 STATUTES Louisiana Civil Code Art. 1901 ...........---..e50ees LSA-R.S. 23:1032 and 1061 ..........-----sseeee cess U.S.C.A. Title 28, Section 1254(1) ..........------+55: U.S.C.A. Title 28, Section 1332 .........----..+++e0: SUPREME COURT OF THE UNITED STATES October Term, 1973 No. CHEVRON CHEMICAL COMPANY - ORONITE DIVISION, Petitioner, versus LIBERTY MUTUAL INSURANCE COMPANY, MECHANICAL CONTRACTING ENGINEERS, INC. AND MR. WILLIAM F. COLE, Respondents. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE HONORABLE THE CHIEF JUSTICE AND THE ASSOCIATE JUSTICES OF THE SUPREME COURT OF THE UNITED STATES: Your petitioner, Chevron Chemical Company - Oro- nite Division, respectfully prays that a writ of certiora- ri be issued out of and under the seal of this Court to review the April 23, 1973 judgment by the United States Court of Appeals for the Fifth Circuit in No. 72- 1025 entitled “WILLIAM F. COLE, Plaintiff-Appellant, versus CHEVRON CHEMICAL COMPANY - ORON- ITE DIVISION, Defendant-Appellee, MECHANICAL CONTRACTING ENGINEERS, INC., and LIBERTY POY ERIE ARR AR 1898 IRR STE CONVEY NRNIFL OO SSRN ASLO ee AREAS BRE BACHE: SESS AED Bi ist Sete a RSA ILE ERA PEE READ AD YE ASA, ae Rt ie Aton Sh MUTUAL INSURANCE COMPANY, Third-Party De- fendants-Appellees-Appellants”, Opinion April 23, 1973, 5 Cir. 1973, F.2d ___, which affirmed in part and reversed in part the July 30, 1971 findings of fact, the October 7 and December 20, 1971 opinions and January 4, 1972 judgment by the District Court of the United States for the Eastern District of Louisiana, New Or- leans Division, in Civil Action No. 68-1943C entitled “WILLIAM F, COLE versus CHEVRON CHEMICAL COMPANY - ORONITE DIVISION,” which are in part reported as Cole versus Chevron Chemical Company, 334 F.Supp. 263 (1971). JURISDICTION The opinion of the United States Court of Appeals for the Fifth Circuit was rendered April 23, 1973. A petition for rehearing en banc was filed by petitioner on June 6, 1973 and was denied in a per curiam opinion on June 19, 1973. A motion was made for the stay of mandate pending the filing of this petition for certiora- ri and was granted on July 5, 1973 to and including August 5, 1973. Jurisdiction to review this case upon writ of certiora- ri is authorized and created by U.S.C.A. Title 28, Sec- tion 1254(1). See: General Talking Pictures Corpora- tion versus Western Electric Company, Inc., et al., 304 U.S. 175 (1937); The Tungus versus Skovgaard, 358 U.S. 588 (1959); and, Goett versus Union Carbide Corp., 361 U.S. 340 (1960) Pee fm a ee eee PA MECTS OAT : Brciwey zie. ee Fa TAS BRACE ENT SARE PTI FLITE LON SRE Ty Gm PSE 3 OPINIONS BELOW The findings, opinions and judgment, by the District Court of the United States, as well as the judgment, opinion and denial of the petition for rehearing en banc by the United States Court of Appeals for the Fifth Circuit are printed in the Appendix. QUESTIONS PRESENTED FOR REVIEW Whether as a matter of law, the Trial Court correctly awarded to petitioner the stipulated legal fees and costs incurred arising out of the conventional indemni- ty and insurance agreements among the parties, which judgment was reversed by the United States Court of Appeals for the Fifth Circuit. STATEMENT OF THE CASE Respondent, Mr. William F. Cole, a laborer-welder, sued petitioner, Chevron Chemical Company - Oronite Division (hereinafter called Chevchem), in the District Court of the United States under the provisons of USCA. Title 28, Section 1332, for injuries allegedly sustained in a February 16, 1968 slip-and-fall incident on its premises, while in the course and scope of his employment by and under the control, direction and supervision of respondent, Mechanical Contracting Engineers, Inc. (hereinafter called Mechanical). In response to the complaint, Chevchem was compelled and forced to assert a third-party complaint over a- gainst Mechanical and its insurer, respondent Liberty Mutual Insurance Company (hereinafter called Liberty prtapians 4 — FLEE ART ED ORE NOI hy II Rl nt ie grat so abate Ki fen WU SIN te SOIT ia 3 4 Mutual), on the basis of contractual indemnity and in- surance agreements among the parties pertinent to the work being performed by Mr. Cole at the time of his alleged accident. Upon completion of delayed discovery, motions to dismiss and/or for summary judgment with support- ing affidavits were filed in the Trial Court by Chev- chem against Mr. Cole under the application and pro- visions of LSA-R.S. 23:1032 and 1061, to the extent that at all times pertinent he was as a matter of law a statutory employee and could not maintain a tort ac- tion against Chevchem in its principal/subcontractor relationship with Mechanical. The Trial Court on Octo- ber 23, 1969, after earlier argument, granted a limited judgment to Chevchem in this multiparty action, dis- missing the complaint, from which an earlier appeal was taken by Mr. Cole. The United States Court of Appeals for the Fifth Cir- cuit in accordance with the provisions of Local Rule 18 placed the appeal on the summary calendar and the panel concluded “... that this case is of the char- acter that does not justify oral argument, . . .”. In re- versing the summary judgment and remanding be- cause “... material factual issues remain to be tried ...”, that Appellate Court observed that the ee ture of Chevron’s operations at its Oronite Division Plant is not clear.” Cole versus Chevron Chemical Company, 427 F.2d 390 (1970) at pages 392-394. Thereafter, the factual issues raised by Mr. Cole in the complaint against Chevchem were tried by a jury Se a 2 ee — — — TS TDI PERS Oe oe ORES KASS SS + 5 and those arising out of Chevchem’s third-party com- plaint against Mechanical and Liberty Mutual, were subsequently tried independently by the District Court of the United States without a jury. In the face of an adverse decision by the jury, the Trial Court granted Chevchem’s motion for judgment notwithstanding the verdict and in the non-jury trial awarded it the stipu- lated legal fees and costs against Mechanical and Liberty Mutual on the contractual indemnity and in- surance demands in the third-party complaint, from which appeals were taken by Mr. Cole, Mechanical and Liberty Mutual. The United States Court of Appeals for the Fifth Cir- cuit on April 23, 1973 affirmed the judgment notwith- standing the verdict granted Chevchem, but reversed the award to it of the stipulated legal fees and costs. A petition for rehearing en banc was timely filed, but promptly denied in a June 19, 1973 opinion. REASONS RELIED ON FOR GRANTING THE WRIT OF CERTIORARI It is the contention and position of Chevchem that the United States Court of Appeals for the Fifth Circuit has in the April 23, 1973 opinion decided an important question of law which is now in conflict with the appli- cable laws of the State of Louisiana. In pages 12, 13, 14, 15 and 16 of the printed April 23, 1973 opinion, the United States Court of Appeals for the Fifth Circuit concludes that the pertinent in- demnity agreement between Chevchem and Mechani- ESN vg seen ee teeny SPFENES Eo PAPEL EE a PERG . ves cal, which was insured by Liberty Mutual, did not af- ford coverage for the stipulated legal fees and costs incurred by Chevchem in defense of the meritless claims advanced by plaintiff-appellant. Initially, as an employee of the independent contrac- tor Mechanical, Mr. Cole sued Chevchem for damages allegedly sustained in the course and scope of his work as a result of a February 16, 1968 accident. At the time thereof, Mechanical was performing services in furtherance of a written indemnity agreement with Chevchem, which was insured by Liberty Mutual. On November 12, 1968, Chevchem was served with the complaint and promptly formally proffered its de- fense and indemnity to Mechanical and Liberty Mu- tual, requesting prompt acknowledgement and accept- ance of the tenders. The allotted time passed without affirmative action on the part of Mechanical and Liberty Mutual, thereby compelling and forcing Chev- chem to defend itself against the claims of Mr. Cole. A third-party complaint was asserted in the respon- sive pleadings filed by petitioner and in the Trial Court as well as on appeal, it was determined that Mr. Cole’s claims were without merit. However, while the Trial Court awarded Chevchem the stipulated legal fees and costs in the defense of Mr. Cole’s meritless claims, the United States Court of Appeals for the Fifth Circuit reversed that portion of the judgment. It is the con- tention of Chevchem that as a matter of law it is en- titled to recover this amount from Mechanical and Libetty Mutual, predicated on the pertinent portions REPRE WIA Ie PET ANTAL ERS ed SLED ES SY ee LS ES rs 7 of the agreement with this independent contractor, which reads as follows: “11 Independent Contractor: CONTRAC- TOR shall be an independent contractor, main- taining complete control over CONTRAC- TOR’S men and operations. 8. CONTRACTOR’S _UNDERSTANDING: It is understood and agreed that CONTRACTOR, as the result of careful examination, is satis- fied as to the nature and location of the work, the conformation and structure of the ground, the character, quality and quantity of the ma- terials to be used, the character of equipment and facilities needed preliminary to and during the prosecution of the work, the general, and local conditions, and all other matters which can in any way affect the work under this con- tract... 15 Safety Measures: CONTRACTOR shall take all reasonable precautions to protect the work, workmen and the public; and shall pro- vide, where reasonably necessary, barriers, guards, temporary bridges, lights and watch- men... 41. Inspection: ... CONTRACTOR shall pro- vide safe and proper facilities therefor. CON- TRACTOR shall at all times during working hours keep a competent man in the immediate vicinity of the work to receive communications from COMPANY and to supervise the work. BER ge Poe CR TERE eS 5 Wied nae ok pane bik As is be al atts (Rithogdas Bier uepeeuatuabet eureka SWS I Seer te anes “or 5.1 General Liability: CONTRACTOR shall indemnify and save COMPANY harmless from and against any and all loss, damage, injury, liability and claims thereof for injuries to or death of persons, and all loss or damage to property of others, resulting directly or indi- rectly from CONTRACTOR’S performance of this contract.” (Emphasis added.) It is undisputed that Mechanical and Liberty Mu- tual knew at the time of the execution of the contract and the issuance of insurance coverage therefor that the contemplated work to be performed by individuals, such as Mr. Cole, was a hazardous occupation, for which insurance protection was needed and ob- tained. Moreover, from time to time it was known that these laborers were injured in the course and scope of their duties, resulting in claims being made and litigation instituted thereon. Surely, Mechanical and Liberty Mutual must have been aware that on the filing of such lawsuits, lawyers had to be employed, together with costs and expenses being incurred in the defense of such claims. Mechanical agreed, as an independent contractor, to protect Chevchem for such claims as were made by Mr. Cole. Furthermore, the controlling language in the contract does not limit the indemnity of Chev- chem by Mechanical as insured by Liberty Mutual to any claim successfully prosecuted by a workman, Sim- ply stated, the wording used in the agreement unequiv- ocally states “ ... any and all loss, damage, injury, liability and claims ...” (Emphasis added.) 9 Beyond question, the filing of the complaint by Mr. Cole constituted a claim within the conditions and terms of the agreement between Chevchem and Me- chanical, which was insured by Liberty Mutual. See: L. L. Bogle d/b/a Oil Field Maintenance Company and Travelers Insurance Company versus The California Company, 369 F.2d 699 (1966) affirming White versus The California Company, et al., 250 F.Supp. 586 (1966); Seneca versus California Oil Company, et al., 244 F.Supp. 350 (1964); Keystone Tankship Corporation versus Williamette Iron & Steel Company, 222 F.Supp. 320 (1963); and U.S. versus Tieger, 138 F.Supp. 709 (1954). This specific intent and meaning of the agree- ment at the time of its execution must be deduced from the entire contract, the subject matter and the purposes thereof, together with all of the surrounding circumstances. U.S. Fidelity & Guaranty Co. versus Wilson, 41 F.2d 319 (1930); White, supra; and, Seneca, supra. It cannot be denied that a logical and proper inter- pretation of the language used in the agreement re- quires a conclusion and finding that the parties fully meant to obligate and require Mechanical and Liberty Mutual, to defend Chevchem against all claims, meri- torious or otherwise. In this connection the complaint on its face indicated a substantial potential lability, the defense of which required the services of highly competent legal counsel and the incurrence of costs and expenses in connection therewith. Under indemni- ty agreements similar to, but not as incisive as the agreement here at issue, the Courts have held that the principal could recover from the independent con- PE EEE OLE TTL EEE LE ROT IE 10 tractor legal fees, costs and expenses in defending such a meritless claim.' The fact that liability was or was not established against Chevchem, can have no significance. In in- stances such as what is now before the Court where the indemnitor and its insurer by inaction failed to undertake their commitments, as a matter of law, the indemnitee was held entitled to protect itself by em- ploying lawyers and incurring costs and expenses.’ The rights of Chevchem, as specified in the agreement and insurance policy, supersede any civil, maritime or common law theory.* Herein, we are not concerned with the doctrine of implied warranty of workmanlike services, in which indemnity over is granted on the showing a breach of contract. The sole issue before the Court is not the liabilities and rights of the parties under an im- plied warranty of workmanlike services as involved in Ryan Stevedoring Co., Inc. versus Pan-Atlantic SS Corp., 350 U.S. 124 (1961), but the liabilities and rights of the parties on a proper construction and interpreta- tion of a written indemnity agreement and policy of ‘Ludwig Mowinckels Rederi versus Commercial Stevedoring Co., 256 F.2d 227 (1958); and, Pure Oil Co. versus Geotechnical Corp., 129 F.Supp. 194 (1955). 2White, supra; Gonzales versus Pennsylvania RR Co. versus Im- parato Stevedoring Corp., 183 F.Supp. 779 (1960); and, Chesa- peake and Ohio Ry. Co. versus Bailey Production Corp., 163 F.Supp. 666 (1958). 3U. S. Steel Corporation versus Emerson-Comstock Co., Inc., 141 F.Supp. 143 (1956); and, B & G Electric Co. versus G. E. Bass & Co., Inc., 252 F.2d 698 (1956), cert. den. 357 U.S. 931. aUnion Pacific Railroad Co. versus Bridal Veil Lumber Co., 219 F.2d 825 (1955). SEES Sea NCES , ee: : FES LLLP PI ALLE ELIE AD SE SPLITS IA TES Ee a oS 11 insurance issued thereon. Keystone, supra; White, su- pra; and, Seneca, supra. The realistic application and meaning of the perti- nent provisions of the agreement and insurance policy for the work undertaken dictate that the circumstances surrounding the alleged accident is the exact and pre- cise reason for their existence. Liberty Mutual collect- ed premiums therefor, yet contrary to its representa- tions has repeatedly and unconscionably refused to honor its commitment and obligations. This is the true issue in the case and the insurance policy must be read in the light of practical business demands and risks.® Additionally and of paramount importance is the fact that the April 23, 1973 opinion by the United States Court of Appeals for the Fifth Circuit is in conflict with other more controlling law of the State of Louisi- ana as decided in Jennings versus Ralston Purina Co., 201 So.2d 168 (1967); and, Chaney versus The Travelers Insurance Company, 249 So.2d 181 (1971), the latter rendered by the Supreme Court of Louisiana. The Trial Court in interpreting the indemnity agreement be- tween Chevchem and Mechanical and upholding its va- lidity, beginning at page 264, stated as follows: “Since Chevron and Mechanical had a con- tractual indemnity agreement, the cases deal- ing with the obligation of implied indemnity in the absence of contract are inapplicable. Com- pare Humble Oil and Refining Co. v. Naquin, SJewelers Mutual Ins. Co. versus Balough, 272 F.2d 889 (1959). 12 5 Cir. 1969, 414 F.2d 912; Halliburton Company v. Norton Drilling Company, 5 Cir. 1962, 302 F.2d 431; General Electric Co. v. Cuban Ameri- can Nickel Co., 5 Cir. 1958, 396 F.2d 89; United Gas Corp. v. Guillory, 5 Cir. 1953, 206 F.2d 49. “It was not claimed in the pleadings or the pre-trial order that the written indemnity a- greement did not accurately reflect the under- standings between Chevron and Mechanical, or that it was ambiguous, and its interpretation must therefore be determined as a matter of law, based on the language used therein by the parties. Mills v. Fidelity & Casualty Co., 226 F.Supp. 786, at 790 aff’d per curiam, 5 Cir. 1964, 338 F.2d 341; and Arnold v. Stupp Corp., La. App. 1967, 205 So.2d 797 at 804. “Louisiana courts, whose opinions we are obliged to follow in this diversity case, have held that a contract of indemnity will not be construed to indemnify against a loss resulting solely from the indemnitee’s own negligent acts unless that intention is expressed in un- equivocal terms. Arnold v. Stupp Corp., La. App. 1968, 205 So.2d 797. Compare Jennings v. Ralston Purina Co., La. App. 1967, 201 So.2d 168, which the court distinguished in Arnold. See also Gorsalitz v. Olin Mathieson Chemical Corp., 5 Cir. F.2d __. (Sept. 28, 1971, #30631); compare the discussion by this court in Despaux v. California Co., E.D. La. 1968, 286 F.Supp. 558. Louisiana, like most states, has indicated a tendency to construe indemnity a- —* te * che EIR ae PRUE 0 PELLET AT LR DEEL LLMEDS ELIE LEE EE IAI PLN EINE ERE GEM LEG BAS. a ec 13 greements narrowly, particularly where, as here, they were drafted by the indemnitee. Jennings, supra, at 175; Arnold, supra, at 799. “But the mandate that an agreement is to be read narrowly does not mean it is to be disre- garded. The agreement must be given effect, according to the intention of the parties, for the contract is the law between them. Louisiana Civil Code Art. 1901.” CONCLUSION It is respectfully submitted that a Writ of Certiorari should be granted to review and reverse that part of the April 23, 1973 decision by the United States Court of Appeals for the Fifth Circuit which denied the award by the Trial Court to Chevchem for the stipulated legal fees and costs incurred arising out of the conventional indemnity and insurance agreements among the par- ties, because that Court has decided an important ques- tion of law which is now in conflict with the applicable laws of the State of Louisiana. MESSRS. McLOUGHLIN, BARRANGER, PROVOSTY AND MELANCON Of Counsel PEELS ERSTE PELL NY GD MS Gs 14 PROOF OF SERVICE lt is hereby certified that three copies of the above and foregoing petition were served by the writer de- positing the same in a United States mail box with first class postage prepaid thereon addressed as follows: George J. Kambur, Esq., of Messrs. Kambur and Drury, 809 North Broad Street, 207 G.J. Kambur Building, New Orleans, Louisiana 70119; Clark A. Richard, Esq., 208 Southern Savings Building, New Orleans, Louisiana 70112; and John V. Baus, Esq., of Messrs. Jones, Walk- er, Waechter, Poitevent, Carrere and Denegre, 225 Ba- re@nne Street, New Orleans, Louisiana 70112, on this day of Juiy, 1973. SBS RE AE ANB LOR IOI OGLE MMI CRIT Reta ATL Vat NERA, LACIE Ct ET SS OAS dE la APPENDIX I Art. 1901. Binding effect of agreements between parties Art. 1901. Agreements legally entered into have the effect of laws on those who have formed them. They can not be revoked, unless by mutual consent of the parties, or for causes acknowledged by law. They must be performed with good faith. APPENDIX Il § 1032. Exclusiveness of rights and remedies; employer’s liability to prosecution under other laws The rights and remedies herein granted to an em- ployee or his dependent on account of a personal in- jury for which he is entitled to compensation under this Chapter shall be exclusive of all other rights and remedies of such employee, his personal representa- tives, dependents, or relations. Nothing in this Chapter shall affect the liability of the employer to a fine or penalty under any other statute. APPENDIX III § 1061. Principal contractors; liability Where any person (in this section referred to as principal) undertakes to execute any work, which is a part of his trade, business, or occupation or which he had contracted to perform, and contracts with any 2a person (in this section referred to as contractor) for the execution by or under the contractor of the whole or any part of the work undertaken by the principal, the principal shall be liable to pay to any employee em- ployed in the execution of the worker to his depend- ént, any compensation under this Chapter which he would have been liable to pay if the employee had been immediately employed by him; and where compen- sation is claimed from, or proceedings are taken a- gainst, the principal, then, in the application of this Chapter reference to the principal shall be substituted for reference to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the employee under the employer by whom he is immediately employed. _ Where the principal is liable to pay compensation under this Section, he shall be entitled to indemnity from any person who independently of this Section would have been liable to pay compensation to the em- ployee or his dependent, and shall have a cause of ac- tion therefor. APPENDIX IV § 1254. Courts of appeals; certiorari; appeal; certified questions (1) By writ of certiorari granted upon the petition of any party to any civil or criminal case, before or after rendition of judgment or decree; RAR BEV ALM DR RES ML WARE LEA RI EARNS RG BRIS AE TINE TREN NA PI EP PET EE PP RST 3a APPENDIX V § 1332. Diversity of citizenship; amount in controversy; costs (a) The district courts shall have original jurisdic- tion of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of in- terest and costs, and is between — (1) citizens of different States; (2) citizens of a State, and foreign states or citizens or subjects thereof; and (3) citizens of different States and in which foreign states or citizens or subjects thereof are additional parties. (b) Except when express provision therefor is other- wise made in a statute of the United States, where the plaintiff who files the case originally in the Federal courts is finally adjudged to be entitled to recover less than the sum or value of $10,000, computed without re- gard to any setoff or counterclaim to which the de- fendant may be adjudged to be entitled, and exclusive of interest and costs, the district court may deny costs to the plaintiff and, in addition, may impose costs on the plaintiff. (c) For the purposes of this section and section 1441 of this title, a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business: Provided further, That in any direct action against the insurer of a policy or contract of liability insur- ance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of So i TRNAS HL NTO TFE NE OE PLE PRY US (8 Nel WT A eT TORN RRC Ne ete SAPO TAN PW Seah, rs ; 2 3 4 : i - Be seated, please. ee sae _ BE ALDARA 8 which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business. (d) The word “States”, as used in this section, in- cludes the Territories, the District of Columbia, and the Commonwealth of Puerto Rico, June 25, 1948, c. 646, 62 Stat. 930; July 26, 1956, c. 740, 70 Stat. 658; July 25, 1958, Pub.L. 85-554, § 2, 72 Stat. 415; Aug. 14, 1964, Pub. L. 88-439, § 1, 78 Stat. 445. APPENDIX VI Filed: Aug. 2, 1971 IN THE DISTRICT COURT OF THE UNITED STATES EASTERN DISTRICT OF LOUISIANA NEW ORLEANS DIVISION CIVIL ACTION NUMBER 68-1943 SECTION C WILLIAM F. COLE, Plaintiff, versus CHEVRON CHEMICAL COMPANY - ORONITE DIVISION, Defendant. July 30, 1971, FINDINGS OF FACT * «x x = {2] THE COURT: 5a THE COURT: All right, gentlemen, I am now going to make my findings of fact, which will be typed up and made avail- able to you, and I think I am going to reserve judg- ment on the legal implications of some of these facts until I can review the additional supplemental briefs and think about it a little bit more. The record shows and, of course, I find as a fact, the answers to the interrogatories propounded to the jury herein after the trial on the merits which shows that the jury found that the injury to Mr. Cole resulted proximately from the negligence of Chevron, that it did not result from the contributory negligence of Mr. Cole, and that the total amount of damages was $67,500.00. Two, on September 1, 1967, pursuant to contract C-773, dated November 24, 1967, Chevron Chemical Company, whom I will refer to merely as Chevron, [3] and Mechanical Contracting Engineers, Incorpor- ated, agreed that Mechanical Contracting would do certain work on the premises of Chevron. Three, one of the conditions of this contract was “5.1, General Liability: Contractor shall indemnify and hold company harmless from and against any and all loss, damage, injury, liability, and claims thereof for in- juries to or death of persons and all loss or damage to property of others, resulting directly or indirectly from contractor’s performance of his contract.” And, of course, the remainder of the contract is in evidence. Four, on February 16, 1968, at the time that Mr. Cole alleges that he was injured, Mechanical was engaged 6a on Chevron’s premises in the performance of contract C-773, and Mr. Cole was working for Mechanical on Chevron’s premises. He was then working under the control and direction and supervision of Mechanical, which was an independent contractor. Five, thereafter on November 12, 1968, Mr. Cole filed suit against Chevron. He served the plaintiff's com- plaint and summons. [4] Six, on November 15, 1968, Chevron tendered the defense of this action to which Mechanical and its in- surer, Liberty Mutual, had asked for indemnities alleg- ing the applicability of 5.1 and the other provisions of the contract. Seven, Mechanical in turn on November 22, 1968, ten- dered the defense of indemnity to Chevron. Eight, thereafter both Mechanical and Liberty Mv- tual declined to offer indemnity or to undertake the defense, and Chevron was then compelled to defend itself in this action. Nine, that as a result of the necessity for defense, Chevron incurred $6,195.00 in attorney’s fees and at- torney’s costs. The amount was reasonably incurred. Ten, the trial of the plaintiff's case against Chevron was severed from Chevron’s indemnity against Me- chanical and Liberty Mutual. Neither Chevron nor Me- chanical and Liberty Mutual requested a jury trial of this third party complaint, although the Court inquired whether they desired a jury trial of the third party complaint and the defense thereto, consequently to a- void confusing the jury. When the parties indicated 7a they preferred this action to be [5] tried through the Court, the Court did not permit Mechanical or Liberty Mutual to participate in the trial of the Cole case, and Liberty Mutual and Mechanical were not permitted through counsel to make objections to evidence, cross examine witnesses, present additional evidence or oth- erwise participate in the trial. Eleven, third party defendants were denied the right to have Mr. Franklin present in the trial because of the possibilities he would be called as a witness and because he was not a representative of one of the par- ties present during the Cole trial. Third party defendants were refused permission and indeed were advised that they could properly have counsel present in the courtroom to hear and observe what went on, they were advised that such counsel would not be permitted to participate actively in the trial. All right, now, I am going to state generally a few of my legal observations and reserve my final conclu- sions thereon. I suppose that in fairness to the parties I ought to give a little discursive treatment of this [6] case. My conclusions will not in any way be clear unless I state the premises on which they are based. I think the evidence from which the jury found lia- bility, ie, negligence on the part of Chevron was sketchy at best. I have some doubt that were I the 2a Bem PRS ee 5 tg Bly a ates EN i IR al NN Wc A allah lle Sil AA ine ace moe é 4 = . i : maui 8a trier of fact I would have found such negligence without in any way, however, prejudicing the new trial motion, I will say that I think at this time there was evidence from which the jury might have concluded what they did and that the evidence is not so sketchy that I ought to substitute my judgment for theirs. Put another way, I think the verdict is likely not in accordance with what I perceived to be the prepon- derance of the evidence but not so remote that no rea- sonable man could reach that conclusion. Well, obviously, I start with somewhat mixed mo- tives about the verdict. I will try to make those ex- plicit. But if we accept the verdict as it is, then there can be no doubt that the jury did find that Chevron was negligent. [7] Now, there are only a limited number of kinds of negligence that Chevron could have been guilty of. I suppose we are trying to be exhaustive, these would include failure to clean the pipes thoroughly before they were cut, failure to clean the area thoroughly before it was worked on, and failure of the firewatch to clean up the spill after it happened. I don’t know of any other alleged negligence really that was possibly embraced in the testimony on the main demand, and I don’t know of any that was referred to in the third- party complaint, but if Chevron’s negligence was any one or all of these, it seems to me that there must have been some act by Mechanical that directly or indirectly contributed to the injury. 9a If Chevron’s negligence was failure to clean the pipes properly, then undoubtedly the time when something spilled was when it was cut by a welder for Mechanical. And if that be so, then that welder knew very well whether the firewatch cleaned up because it was the firewatcher’s duty to say, stop work and clean, so he knew then and there the firewatch didn’t clean it and then and there knew the firewatch [8] didn’t see it. I take it he could not resolve himself completely from responsibility by shrugging his shoulders and saying, oh, well, he didn’t notice it, ha, ha, and go about his work. The second possibility is that Chevron didn’t clean the area completely, and there is some testimony by Mr. Cole today that there was a lot of grease around everywhere. Mr. Rippe testified the area was pretty clean, but let’s assume that it was not sufficiently clean. Mechan- ical had been working there for several days. I think if the area was greasy and hazardous, even if the haz- ard was, as Mr. Cole’s testimony today indicates, pres- ent only when this catwalk was removed, Mechanical had some duty to notice what was going on, and I don’t think it ean be said that it was the firewatcher’s re- sponsibility to peer under a catwalk or certainly not his sole responsibility. Taken from a standpoint most favorable to Mechanical, Mr. Cole’s testimony would lead to the belief that there was a pool, a gallon of oil under the catwalk, not visible until the catwalk was removed. But who removed the catwalk? [9] Me- chanical. Who was in the position to see it first? Per- ce ee a 6 ip PATRI Sele, ENS SCL ae NE 9 ANE ERLE A 6 NMG REG I ee OE OY 10a haps not Mr. Cole but certainly Mr. Walters, because it was on his side of the pipe. ' And the third possibility we have already mentioned of negligence is that of the firewatcher’s failure to clean, failure to clean either a spill or greasy con- dition that pre-existed Mechanical’s entrance on the scene or one that occurred subsequently. And, as I have indicated, I think in either event Mechanical’s performance of its operations under the contract like- ly contributed directly or indirectly to the events on which their suit is based. I think the real problem, of course, that counsel try- ing the case today have is that they, perhaps even more than the Court, feel, well, there wasn’t anv evi- dence really that there was any oil there and, there- fore, the jury should not have held anybody liable. But that’s what the jury did. And you gentlemen had a chance to try your case and your claim to that same jury and have them make whatever findings they chose to make, consistent, inconsistent, or otherwise. We all know that if judges and juries always de- cided cases exactly the same way, we would have no [10] need for both of them or we could dispense with one or the other. The only reason we have juries is they do decide cases differently from judges, and we have certain rules that govern their deviance. If they deviate so much, we can say, it’s inflamed by passion, throw it out, start all over, it differs so much no rea- sonable man could do that, throw it out and start all over, there isn’t enough evidence to go to the jury to lla give a judgment that notwithstanding the verdict, don’t even give a new trial. These are the perimeters of the limits that have to be set to the jury sometimes, but within those limits juries do deviate from what judges think, and obviously they deviate from what lawyers say in argument, they don’t concur. Now, I will reserve final conclusion after further study as to what judgment, if any, ought to be entered based on these findings. If you gentlemen are moved by my remarks to cite me something that you think I have grossly overlooked, why, whether I have overlooked without being gross about it, why, I will read it. I have not gone back and reread everything in the case, but I have read rather carefully, and [11] more than once, both the Chevron brief and the Mechanical brief filed with respect to the hearing today. Anything further at this time, gentlemen? MR. MELANCON: No, your Honor. MR. BAUS: No, your Honor. THE COURT: Okay. Thank you very much, gentlemen. ONS ARR 12a MR. BAUS: ’ If the Court pleases, apparently to the degree that I guess we feel you are inviting further briefs I think — THE COURT: ’ You can have this off the record. MR. BAUS: Off the record. (Whereupon, a discussion was had of the record, after which time the following proceedings were had:) THE COURT: Court will stand at recess. (Whereupon, court adjourned.) l3a APPENDIX VII , Filed: Oct. 8, 1971 IN THE DISTRICT COURT OF THE UNITED STATES EASTERN DISTRICT OF LOUISIANA NEW ORLEANS DIVISION CIVIL ACTION NUMBER 68-1943 SECTION C WILLIAM F. COLE, Plaintiff, versus CHEVRON CHEMICAL COMPANY - ORONITE DIVISION, y Defendant. OPINION WITH RESPECT TO INDEMNITY ISSUES RUBIN, District Judge: This diversity case requires a review of Louisiana law to determine the effect to be given a contractual indemnity agreement. Mechanical contracted with Chevron to do welding and cutting work in connection with the construction of an addition to Chevron’s plant. Cole, a Mechanical employee, was injured on the job. Precluded from su- Ailey oe a RE a et LR, Pet l4a ing Mechanical in tort by the Louisiana Workmen's Compensation Law, Cole sued Chevron. Chevron then filed a third party complaint against Mechanical. In a trial to a jury, Cole prevailed against Chevron and the jury awarded him $67,500. This verdict is now under attack by post trial motions. Chevron and Me- chanical had, however, agreed to submit their litiga- tion to the court. I. THE CONTRACT AND THE VERDICT Chevron’s rights with regard to Mechanical are fixed by their contract. This provides in part: 5.1 General Liability: CONTRACTOR shall indemnify and save COMPANY harmless from and against any and all loss, damage, injury, liability and claims thereof for injuries to or death of persons, and all loss or damage to property of others, resulting directly or indi- rectly from CONTRACTOR’S performance of this contract. Cole’s testimony was that he hurt himself when he slipped in a pool of oil, comprised of both “old” and “new” oil. This testimony was confirmed by his fel- low worker, Walters. They both testified that Cole and Walters were carrying an iron grating; Cole, following Walters, stepped over a pipe, and Cole slipped in a pool of oil. These two witnesses, whose version was obviously accepted by the jury, offered the only evi- 15a dence concerning the cause of the incident and the kind of oil allegedly involved. The evidence indicated that the “new” oil spilled when Mechanical’s welders cut pipes containing this oil, but the “old” oil was presumably left from Chevron’s earlier operations. Cole’s theory, which the jury accepted, was that it was Chevron’s duty to clean oil from the work area before Mechanical’s work began, and the duty of Chevron’s firewatcher to clean spilled new oil. The jury found that Chevron was negli- gent and Cole was not contributorily negligent. Since the jury apparently accepted Cole’s account, it must have concluded that some of the oil was “new” oil, spilled during Mechanical’s operations. If this was so, it was the duty of Mechanical’s personnel to call the spill to Chevron’s attention. Cole was working under Mechanical’s direction and supervision. Mechanical had an express contractual obligation to keep “a competent man in the immediate vicinity of the work to receive communications from [Chevron] and to supervise the work.” The facts the jury accepted must be based on the theory that the accident was caused “directly or indirectly” by Me- chanical as well as by Chevron’s negligence. The jury verdict establishes that Chevron was at fault, and Chevron is bound by that finding. But the conclusion that negligence on Chevron’s part was a proximate cause of Cole’s injury does not exclude fib watt Te whe) l6a ‘the possibility that the injury resulted at least indi- rectly from Mechanical’s performance of the contract. Under the agreement, “negligence” or “fault” on Mechanical’s part is not the sole condition that creates a duty to indemnify. Indemnity is due whenever Chevron sustains loss or damage resulting directly or indirectly from Mechanical’s performance of its con- tract, whether or not Mechanical has in fact been “neg- ligent.” Il. INTERPRETATION OF THE CONTRACT Since Chevron and Mechanical had a contractual in- demnity agreement, the cases dealing with the obliga- tion of implied indemnity in the absence of contract are inapplicable. Compare Humble Oil and Refining Co. v. Naquin, 5 Cir. 1969, 414 F.2d 912; Halliburton Company vy. Norton Drilling Company, 5 Cir. 1962, 302 F F.2d 431; General Electric Co. v. Cuban American Nickel Co., 5 Cir. 1958, 396 F.2d 89; United Gas Corp. i -v. Guillory, 5 Cir. 1953, 206 F.2d 49. It was not claimed in the pleadings or the pre-trial order that the written indemnity agreement did not accurately reflect the understandings between Chevron and Mechanical, or that it was ambiguous, and its interpretation must therefore be determined as a matter of law, based on the language used therein by the parties. Mills v. Fidelity & Casualty Co., 226 F.Supp. 786, at 790 aff'd per curiam, 5 Cir. 1964, 338 F.2d 341; and Arnold v. Stupp. Corp., La. App. 1967, 205 So.2d 797 at 804. ARORA IMC REP ered npn RONAN NIECE RR 17a Louisiana courts, whose opinions we are obliged to follow in this diversity case, have held that a contract of indemnity will not be construed to indemnify against a loss resulting solely from the indemnitee’s own negli- gent acts unless that intention is expressed in un- equivocal terms. Arnold v. Stupp Corp., La.App. 1968, 205 So.2d 797. Compare Jennings v. Ralston Purina Co., La. App. 1967, 201 So.2d 168, which the court distin- guished in Arnold. See also Gorsalitz v. Olin Mathieson Chemical Corp., 5 Cir. 1970, 429 F.2d 1033, 1049, (negli- gence solely that of company), and Dickerson v. Con- tinental Oil Co., 5 Cir. __. F.2d (Sept. 28, 1971, # 30631); compare the discussion by this court in Despaux v. California Co., E.D. La. 1968, 286 F.Supp. 558. Louisiana, like most states, has indicated a ten- dency to construe indemnity agreements narrowly, particularly where, as here, they were drafted by the indemnitee. Jennings, supra, at 175; Arnold, supra, at 799. But the mandate that an agreement is to be read narrowly does not mean it is to be disregarded. The: agreement must be given effect according to the in- tention of the parties, for the contract is the law be- tween them. Louisiana Civil Code Art. 1901. III. LOUISIANA LAW IN ABSENCE OF CONTRACTUAL INDEMNITY — “PURE” TORT SITUATIONS In order to ascertain what the parties intended by their agreement, it will be helpful to compare their respective rights and duties in the absence of a con- pro wn as ee wore oe , ee ° 9 NE et ar ae Dal ea bie ae 18a tractual indemnity agreement under the basic prin- ciples of Louisiana tort and quasi-contract law. ob RO PENA RE x ' The injured person may recover from an alleged : tortfeasor if he proves that his injury resulted from : the tortfeasor’s negligence in whole or in part. If the negligence of some other person, not joined as a de- fendant, is shown to be the sole cause of the injury, then the plaintiff cannot recover. But in the case of joint tortfeasors, either of them may be case in judg- ment for the full damages; hence a defendant who is obliged to pay for the full amount of the injuries resulting from his fault concurrent with the negligence of a third person may claim contribution from the third person, and recover a virile portion of the damage to the plaintiff. La. C.C. 2103, 2104, 2324; 2 Williston } on Contracts § 345 (3d ed. 1959); Note, Contribution Among Joint Tortfeasors, 43 Tul. L. Rev. 153 (1968). Like other states, Louisiana defines the doctrine of contribution as the right of a tortfeasor cast in judg- ment for an injury only partly his fault to recoup part of his loss from the other person who is also at fault. Where, however, the defendant is held vicariously liable and his fault is not actual but only technical or constructive, he has a quasi-contractual claim for indemnity from the third person whose sole fault ac- } tually caused the injury. Appalachian Corp. v. Brook- lyn Cooperage Co., 1922, 151 La. 41, 91 So. 539; Mar- quette Cas. Co. v. Brown, 1958, 235 La. 245, 103 So.2d 269, 273; Northwestern Mutual Fire Ass’n v. Allain, 1954, 226 La. 788, 77 So.2d 395, 399; Accord, Humble dake BAW RT oe Birtacriin Sabin bate 19a Oil, supra at 914; Halliburton, supra at 437; General Electric Co., supra at 90; United Gas, supra at 53. Implied indemnity then is the right to recoup a loss in full because someone else has in fact caused the loss. The costs of defense of the main demand and of pursuing the claim against the third person, how- ever, are not embraced either in indemnity or contribu- tion. Prior to 1960, the defendant in the principal demand, if sued alone, could not enforce contribution or indem- nity in the principal action. If case resulted in judg- ment against him, he was required to file a separate action against the alleged joint tortfeasor. See Kahn v. Urania Lumber Co., La. App. 1958, 103 So.2d 476; La. C.C. art. 2103 as amended by La. Acts 1960, No. 30, § 1. To avoid this multiplicity of actions, addi- tional legal expense, possible inconsistent results, and other hardships, Art. 2103 of the Louisiana Civil Code was amended to permit the defendant to bring a third party demand against the alleged co-debtor. This change in Louisiana’s rules had both procedural and substantive aspects. See LSA-CCP Arts. 1111 et seq; LSA-CC Art. 2103, and explanatory notes thereto. IV. LOUISIANA LAW WHERE THE PERSON AGAINST WHOM INDEMNITY OR CONTRIBUTION IS SOUGHT IS THE WORKMEN’S COMPENSATION EMPLOYER Where the plaintiff in a tort action is an employee of a contractor doing business with a principal, the liability of the statutory employer is limited to work- SMM EGE COLA MAPLE AROS EGA I LEAD COLLIE IN ANG ha OS OT, 20a men’s compensation by the Louisiana Workmen’s Compensation Act whether or not the injury results from the employer’s negligence. LSA-R.S. 23:1032. See generally, comment, The Right of a Third Party to Contribution or Indemnity from a La. Workmen’s Comp. Employer, 38 Tul. L. Rev. 536 (1964). This has been interpreted to preclude a claim by the principal for contribution by the contractor (the statutory em- ployer) when the contractor’s fault is a joint cause “or is even the predominant cause of the damages.” Smith v. Kelly Labor Service, La. App. 1970, 239 So.24 685; McLaughlin v. Braswell, La. App. 1968, 207 So.2d 158; Hebert v. Blankenship, La. App. 1966, 187 So.2d 798. Nor is it certain that quasi contractual indemnity could be obtained where the principal’s fault is merely vicarious. See Humble, supra at 914; Halliburton, su- pra at 434; General Electric, supra at 100-102, cf. Hebert, supra at 803. V. REDISTRIBUTION OF RISKS BY CONTRACT In the usual tort situation, there is no prior relation- ship between the potential tort defendant and his pro- spective indemnitor. Hence they have no opportunity to alter the distribution of risks. But where a principai employs a contractor, the contract between them may embrace not only the work to be done and the price to be paid, but also the risk of tort claims that may arise. See 2 Williston on Contracts, + 345 (3d ed. 1959), 1 Harper and James, The Law of Torts, + 10.2, at 723 (1956). By contract either party may relieve the other from the duty of contribution or from the duty of indemnity. And either may undertake a duty to con- 2la tribute or indemnify where none would otherwise exist,, In Louisiana the validity of an agreement by an em-, ployer to indemnify against tort claims by his own employees has been recognized even though the Work-. men’s Compensation Act would provide an absolute shield in the absence of such a contract. See Hebert. v. Blankenship, La. App. 1966, 187 So.2d 798. Paragraph 5.1 of the contract between Chevron and Mechanical then is an attempt to allocate the risk of certain kinds of loss that may arise during the course of its performance. Such a loss might arise when a, third person, unrelated to either party is injured; when an employee of Chevron is injured; when an employee of Mechanical is injured and sues Chevron; or when property damage is sustained by Chevron. As applied to all of these situations, and particularly the situation where an injured person sues Chevron, this provision must have been intended to alter in some way the rules governing risk distribution that would otherwise be applied. So our effort must be to deter- mine in what way the parties intended to alter these rules. Contractual provisions containing similar terms , have been involved in three cases, two decided by Lou- isiana’s Appellate Courts, and one decided by the Fifth , Circuit Court of Appeals, applying Louisiana law. Gor- salitz v. Olin Mathieson Chemical Corp., 5 Cir. 1970, 429 F.2d 1033; Arnold v. Stupp Corp., La. App. 1967,” 205 So.2d 797; Jennings v. Ralston Purina Co., La. App... 1967, 201 So.2d 168. Compare, Dickerson v. Continental, ; 3 : 3 esc siin dasaatis teaNasadomnids's est Js PAE hd IOI Foon 5 RAT So TaD ITE we Ten Be SPT tai AE itt Te A IE So MME TEAR Sa AS I SO: BE OL REI, IS 22a Oil Co., 5 Cir. F.2d , (Sept. 28, 1971, No. 30631). The words used in the contract involved here are set forth below, and beside them are the provisions inter- preted in the other three cases. Cole “Contractor shall indemnify and save Company harmless from and against any and all loss ... re- sulting directly or indirectly from Contractor’s per- formance of this contract.” (Emphasis supplied) Jennings “Contractor shall protect, indemnify and hold harm- less Company from any loss ... directly or indirectly arising or growing out of the performance of this Con- tract. ...” (Emphasis supplied) 201 So.2d 174 Arnold [Contractor] “agrees to defend, indemnify and save harmless [Company] against any and all liability ... arising out of, caused by, or resulting from ... any business transaction with or work done for [Company] by [Contractors].” (Emphasis supplied) 205 So.2d at 798-99. Gorsalitz “Contractor shall indemnify Owner against: (a) any claim, demand, suit, loss or liability ... arising out of work performed hereunder . . . occasioned by acts or Lae RES 23a omissions, whether or not negligent, of Contractor’s officers, employees, agents or subcontractors.” (Em- phasis supplied) 429 F.2d at 1048-1049. In Jennings, supra an employee of a building contrac- tor sued the principal in tort for injuries he received as a result of negligence by the principal’s employees. The principal impleaded the contractor as a third party defendant asserting the indemnity provision of their contract. Not only did the indemnity provision contain the general language that the contractor would “hold company harmless ... for any ... injury sustained by any person resulting from the performance of this contract,” but it went on to require that the contractor obtain liability insurance to protect the company from claims by “contractor’s workmen.” 201 So.2d at 174. Finding that the principal was solely negligent, the court then required indemnification by the contractor- employer, holding that the phrase “any . . . injury arising out of the performance of the contract” includ- ed all injuries, whether or not the damage resulted from the principal’s negligence. As a result of this de- cision, it is established that indemnification for one’s own negligence is available in Louisiana, even though words specifically assuming liability for the party’s own “negligence” or “fault” are absent from the con- tract. Six months after Jennings, another Louisiana Court of Appeals decided Arnold, supra under substantiallv similar facts. Again the principal was solely negligent, and the contract provided indemnification for “any and all liability ... caused by or resulting from any PAS EP RIE BBE EE IED I IOP CEI IGF AE LOLS tC AGELS he 2 eo : © S bat hae he RMR BAST cccate AS ne UW Ad TM Ply RE des. Ne Rt A REE HAAR ies Os 24a business transaction or work done for [the principal] by the [contractor].” 205 So.2d at 797. The court held that this language was not sufficiently clear and un- equivocal to shift the risk of liability for the principal’s sole negligence. Jennings was distinguished on the bas- is of its contractual provision requiring the contractor to obtain insurance to protect the principal against claims by the contractor’s workmen. 205 So.2d at 803. In Gorsalitz, supra, as here, the injured person was an employee of the defendant in the third party com- plaint from whom indemnification was being sought. The jury there had found the principal defendant negli- gent in 15 different respects. Hence it was clear that its liability was predicated directly on its own negli- gence. The court considered that the indemnity agree- ment did not shift liability for this kind of negligence to the indemnitor because a reasonable construction of the contract was that the contractor intended to in- demnify the principal only for negligent acts of the contractor’s employees, 429 F.2d at 1049. After compar- ing the indemnity agreement in Jennings with the one involved in Gorsalitz, the Court of Appeals found that the agreement in Jennings “demonstrates a clear and unequivocal intent . . . as compared to the contrary intent in this case, to indemnify the indemnitee against his own negligence.” 429 F.2d at 1050. VI. APPLYING THE CONTRACT TO THE COLE CLAIM All of these cases then involve the question of indem- nity for a tort caused by the indemnitee’s sole fault. 25a And all of them discuss the contract provisions in terms of “fault” or “negligence” whether or not these words are employed. As indicated by the discus- sion in Part I, Chevron here seeks indemnity for dam- ages that I conclude were caused “directly or indi- rectly” by Mechanical. If it is necessary to go further and decide whether this implies joint fault, then I con- clude that Mechanical was jointly negligent. Pretermitting the question whether the contract be- tween Chevron and Mechanical affords indemnity for injuries sustained as a result of Chevron’s sole negli- gence, the only remaining scope that could be afforded it would be: (1) To provide indemnity for Chevron when an accident was caused in part by Mechanical; (2) To provide contribution for Chevron when an acci- dent was caused by both jointly; (3) To provide costs of defense in both of these situations and in the situa- tion where Chevron is exonerated. Since the contract speaks in terms of indemnity, not contribution, it ap- pears not to require merely a division of risk. Since this contract, unlike insurance policies, does not con- tain a separate obligation to defend, it appears not to contemplate merely the costs of litigation. Should Chevron’s motion be granted and its Section 6, LSA- R.S. 23:1061, defense be upheld, however, the language would appear to embrace costs of defense. As to the one remaining situation, which is here pre- sented directly, a judgment predicated directly or in- directly on Mechanical’s acts, it appears that the lan- guage of the indemnity agreement must have been in- tended to afford protection to Chevron, else the agree- ey Dek ee a ate ARES in eae Petbtatiesirsttcita sec cceoindsves seubates 26a ment would cover nothing save possibly the costs of defense. Obviously if the agreement is broad enough to cover Chevron’s sole fault, then it reaches the pres- ent case as well. The parties have stipulated that the damage suffered by Chevron amounted to $6,915.00 in addition to any sum for which it may be obligated to Cole. For these reasons the claim for indemnity by Chev- ron against Mechanical will be granted. Counsel for Chevron will prepare an appropriate form or order, to remain interlocutory until the motions still pending on the main demand are disposed of. /s/ ALVIN B. RUBIN UNITED STATES DISTRICT JUDGE New Orleans, Louisiana October 7, 1971 27a APPENDIX VIII Filed: Dec. 21, 1971 IN THE DISTRICT COURT OF THE UNITED STATES EASTERN DISTRICT OF LOUISIANA NEW ORLEANS DIVISION CIVIL ACTION NUMBER 68-1943 SECTION C WILLIAM F. COLE, Plaintiff, versus CHEVRON CHEMICAL COMPANY - ORONITE DIVISION, Defendant. OPINION ON JUDGMENT NOTWITHSTANDING THE VERDICT RUBIN, District Judge: The motion to have the judgment entered on the jury’s verdict set aside and to have judgment en- tered in accordance with the defendant’s motion for a directed verdict, commonly called a motion for judg- ment notwithstanding the verdict, raises a question that has proved particularly troublesome to this court with respect the scope of Section 6 of the Louisiana Workmen’s Compensation Law. The Louisiana Work- 28a men’s Compensation Law provides the exclusive rem- edy of any employee subject to its provisions against all persons who are liable under the law. LSA-RS. 23:1032. Section 6, LSA-R.S. 23:1061 makes the compen- sation law applicable, “where any person (in this sec- tion referred to as principal) undertakes to execute any work which is a part of his trade, business or occu- pation or which he had contracted to perform, and contracts with any person (in this section referred to as contractor) for the execution by or under the con- tractor of the whole or any part of the work under- taken by the principal... .” The question of the applicability of Section 6 to the claim of Mr. Cole was first presented on motion for summary judgment, which was granted in this court. As set forth in the opinion of the Court of Appeals, reversing that judgment, Cole v. Chevron Chemical Company, 5 Cir. 1970, 427 F.2d 390, 392, “Chevchem hired MCEI to do general weld- ing work at the Oronite Division Plant. Cole, an employee of MCEI, was injured while work- ing in the course of his employment as a welder at the plant. He brought this action against Chevchem for the damages that allegedly re- sulted from the latter’s negligence. Chevchem responded that Cole’s exclusive remedy for his injury was to be found under the Louisiana workmen’s compensation law since Chevchem was Cole’s ‘statutory employer,’ and a work- man cannot maintain a tort action under Lou- isiana law against his ‘statutory employer.’” 29a In a previous case, involving a similar situation, the court had submitted the Section 6 issue to the jury, phrased as follows: “Was the work for which Shell contracted with Liberty Welding Company part of Shell’s regular trade, business or occupation?” The Fifth Circuit Court of Appeals had held just a few weeks before, in Arnold v. Shell Oil Company, 5 Cir. 1969, 419 F.2d 43, “that the test for determining whether an ac- tivity is part of an employer’s trade or busi- ness for the purposes of the Louisiana Work- men’s Compensation Statute is whether the particular activity is essential to the busi- ness. The fact that the employer or the in- dustry as a whole always contracts out the ac- tivity is not controlling. This business test clearly carries out the purposes of section 23:1061 — to prevent subversion of the work- men’s compensation laws by an employer con- tracting out part of his business. If the test under this statute were whether the employer had any employees engaged in similar func- tions, the employer could easily subvert the statute by contracting out all of the various parts of his business. For example, if the em- ployer were an integrated oil company, he could contract out all his drilling activity, pipe- line construction and maintenance, refining, and petrochemical processing and virtually e- liminate wokmen’s compensation coverage leaving the workers to collect from a possibly insolvent contractor. Under the essential-to- the-business test, however, all these activities 3 mA J a iad R % is + a 5 = B a iz ig x 3 US Saha WL RRR RNC LR SABLE Labo iat eee 2 eas ere AC AGN LP op SS SERRE LURE EIR rile ol TN A E | 30a would be covered and the purpose of the stat- ute to interpose the solvecy of the oil com- pany between the worker and the contractor would be carried out.” Id. at 50. The Arnold court therefore held that the district court erred in refusing to grant Shell’s motion for judgment notwithstanding the verdict. The panel that considered Cole concluded “that this case is of the character that does not justify oral argu- ment,” and reversed the summary judgment because “material factual issues remain to be tried. ...” The court considered that the “picture of Chevron’s opera- tions at its Oronite Division Plant is not clear.” 427 F.2d at 392-394. There is a different criterion to be applied between considering whether to grant a motion for summary judgment and whether to grant a directed verdict or motion for judgment n.o.v. Cole reaffirms the legal standard applied in Arnold. It is not based on a dif- ferent view of the law but on the thesis that further information might have been developed at the trial concerning “whether the particular activity is so re- lated to the principal employer’s conduct of his trade, business, or occupation that it should be considered as an essential part thereof.” 427 F.2d at 394. Both decisions stress “that the workmen’s compen- sation law should be liberally construed with a view to coverage, regardless of whether the contractor’s employee or the principal is the party asserting cover- age. E.g., Arnold v. Shell Oil Company, 5 Cir. 1969, 3la 419 F.2d 43, 47; Isthmian SS. Co. of Delaware v. Oli- vieri, 5 Cir. 1953, 202 F.2d 492, 494; see Thibodaux v. Sun Oil Co., 40 So.2d 761, 766 (La.Ct.App. 1949), aff'd 918 La. 453, 49 So.2d 852 (1950).” (Emphasis supplied.) 427 F.2d at 393. In the present case, Chevchem was its own general contractor in demolishing certain old facilities and e- recting new ones. MCEI was but a subcontractor. Hence, as in Owen v. Kaiser Aluminum and Chemical Corp., 5 Cir. 1969, 417 F.2d 303, it is clear that Section 6 applies. The evidence shows that, differently from the sugar refiner considered in Moak v. Link-Belt Com- pany, 4 Cir. 1970, 229 So.2d 395, 412, Chevchem could not have continued to operate its business indefinitely without the new process. Mr. Rippe testified, without contradiction, that Chev- chem did this same kind of work continuously, as a matter of course. Mr. Estopinnal testified that this type of revision of production methods was essential to the continued welfare of the plant and had been done al- most continuously since the plant was constructed. He further testified that the Belle Chasse plant’s expan- sion had been continuous, dependent only on economic activity. This testimony was uncontradicted and en- tirely credible. The plant covers 35 acres (on a 70 acre tract) and includes innumerable pipes that carry products and steam from one point to another for processing and, ultimately, for packaging. More than 100 tanks have been added in Mr, Estoppinal’s 26 years with the com- pany. The company has 35 full time employees en- 32a gaged in maintenance work including welders and pipefitters. It is a “matter of choice” whether a par- ticular job is done by the company’s staff or by an outside contractor. Some construction work is done by the company’s staff when the plant’s maintenance workload permits. The plant has been enlarged from a $1,000,000 origi- nal plant to one having a value of $25,000,000, primarily by Chevchem itself. Chevchem’s engineers prepare blueprints, then Chevron decides either to do the ex- pansion work itself or to contract out all or part of it. In the present case, it was proceeding as if it were general contractor, and was subcontracting separate parts of the job. The Louisiana decisions are difficult to reconcile completely.' But they appear to follow the pattern in- dicated by Arnold. The decision of a Louisiana appel- late court in Gray v. Louisiana Power and Light Com- pany, 4 Cir. 1971, 247 So.2d 137, indicates that Arnold and Cole correctly state the legal principles appli- cable in construing Section 6. There an employee of a contractor for a utility company was constructing foundations for towers that were to support electric transmission lines. In the employee’s suit against the ‘Ball v. Kaiser Aluminum and Chemical Corp., Orleans Cir. 1959, 112 So.2d 741, 745, where it was held that construction of a new plant by a firm employed as general contractor was not part of the trade or business of the principal. Cf. Richard v. National Surety Corp., La. App. 1958, 99 So.2d 831, 832. (Where an employee or contractor constructing major power line improvements was, for the purposes of workmen's com- pensation, an employee of the city that operated the power plant.) i. 33a utility company the district court’s summary judg- ment upholding the Section 6 defense was affirmed. The Court indicated that the reasons it did so were: (a) the work in question was an integral and a neces- sary part of the regular trade, business and occupation of the principal and (b) “the charter of LP & L spe- cifically authorized it to have done this construction work if it so desired. The work being done was in fur- therance of its business of producing and transmitting electric power to the public, as evidenced by the ac- companving affidavit. Therefore the injured appel- lant’s sole remedy is in compensation and the motion for summary judgment is well founded.” 247 So.2d at 141. The identical factors are present here. In the present case, the issue was submitted to the jury under instructions that were not objected to in any significant way by either party. Its verdict should not be disturbed if there was any substantial evidence to support it. There is no “substantial evidence which would support a verdict” when “the evidence and all legitimate inferences therefrom [are viewed] in the light most favorable to the party against whom [the] motion” is made. Baron Tube Co. v. Transport Insur- ance Co., 5 Cir. 1966, 365 F.2d 858, 861. “Thus, the motion for judgment n.o.v. may be granted only when, with- out weighing the evidence, there can be but one reason- able conclusion as to the proper judgment,” 5A Moore’s Federal Practice § 50.07, at 2356, and the mo- tion is proper when there is “a complete absence of any evidence to warrant submission to the jury.” Cities Service Oil Co. v. Launey, 5 Cir. 1968, 403 F.2d 537, 539. See Arnold v. Shell Oil Co., 5 Cir., 419 F.2d 43, where in reversing the district court’s denial of a judg- 34a ment n.o.v. in a similar situation, the court found the plaintiff to be a statutory employee “as a matter of law,” 419 F.2d at 46. In this case there was no substantial evidence to support the finding that the work was not part of Chev- chem’s principal trade or business, even when all the record is viewed in the light most favorable to Mr. Cole. Taking all the testimony and all reasonable in- ferences from it, in the light most favorable to Mr. Cole, it clearly appears that Chevchem was his statu- tory employer. For these reasons the motion for judgment notwith- standing the verdict is granted. Because of the result thus reached, it is unnecessary to consider the other motions. /s/ ALVIN B. RUBIN UNITED STATES DISTRICT JUDGE New Orleans, Louisiana December 20, 1971. ‘ el eS ae APPENDIX IX Filed: Jan. 4, 1972 In the District Court of the United States Eastern District of Louisiana New Orleans Division Civil Action Number 68-1943 Section C William F. Cole, Plaintiff, versus Chevron Chemical Company-Oronite Division, Defendant. JUDGMENT The complaint of plaintiff, Mr. William F. Cole, as- Ssetted against Chevron Chemical Company and the third-party complaint of Chevron Chemical Company asserted against Mechanical Contracting Engineers, Inc. and Liberty Mutual Insurance Company, as filed in the above-entitled and numbered Civil Action, were ttied before the Court and a jury, by agreement and Stipulation of the parties, on July 12, 13, 14 and 30, 1971, and the jury after having heard the evidence and testimony answered interrogatories, as follows: 36a CHARGE OF THE COURT AND VERDICT 1- Was the work for which Chevron contract- ed with Mechanical Contracting Engi- neers, Inc., part of Chevron’s regular trade, business or occupation? Yes NoX SPECIAL VERDICT 1- Was Mr. Cole injured on February 16, 1968? Yes____ NoX 2- If your answer is “Yes”, was that injury proximately caused by negligence on the part of Chevron? Yes X No ___ 3- If you answered question No. 1 “Yes” and question No. 2 “Yes”, then was Mr. Cole negligent? Yes NoX 4- If you answered question No. 3 “Yes”, was the contributory negligence a proximate cause of his injury? Yes No 5- If you answered questions No. 1 and No. 2 “Yes”, and either question No. 3 or No. 4 “No”, what amount of damages is due Mr. Cole? $67,500.00 (Total Amount of Damages) sate. REE te GREY 37a and thereafter, the Court made findings of fact on July 30, 1971 and conclusions of law on October 7, 1971, in connection with the claims of Chevron Chemical Com- pany asserted against Mechanical Contracting Engi- neers, Inc. and Liberty Mutual Insurance Company, which now form part of the record. Subsequently, post- trial motions for judgment in accordance with motions for directed verdict, alternatively for judgment non obstante veredicto and new trial were filed by Chevron Chemical Company and a motion for new trial limited to argument of legal issues was filed jointly by Me- chanical Contracting Engineers, Inc. and Liberty Mu- tual Insurance Company, having been heard through notice, and considering the entire record, evidence, stipulations, testimony, and argument, I rendered and filed my opinion on December 20, 1971; IT IS ORDERED, ADJUDGED AND DECREED that there be judgment in favor of Chevron Chemical Company, in accordance with the defendant’s motion for a directed verdict and the complaint and cause of action asserted by Mr. William F. Cole against Chev- ron Chemical Company be and they are hereby dis- missed; and, in the event the motion for a directed verdict had been denied, then I would have granted the motion for new trial by Chevron Chemical Com- pany; IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the motion for new trial limited to argument of legal issues by Mechanical Contracting Engineers, Inc. and Liberty Mutual Insurance Com- pany, be and it is hereby denied; 38a IT IS FURTHER ORDERED, ADJUDGED AND DECREED that Chevron Chemical Company have judgment against and recover from Mechanical Con- tracting Engineers, Inc. and Liberty Mutual Insurance Company, jointly, severally and in solido, the sum of SIX THOUSAND ONE HUNDRED NINETY-FIVE AND NO/100 ($6,195.00) DOLLARS, for legal fees and costs incurred through and including July 30, 1971 in the defense of plaintiff's complaint, with interest there- on at the rate of 6% per annum from November 30, 1971 until paid, and costs in accordance with the provi- sions of the Federal Rules of Civil Procedure, Rule 54, without prejudice to the right of Chevron Chemical Company to subsequently prosecute any claim it may have for additional legal fees and costs incurred in the future, arising out of the defense of plaintiff's de- mands. New Orleans, Louisiana, January 4, 1972. /s/ ALVIN B. RUBIN DISTRICT JUDGE Respectfully submitted: /s/ LLOYD C. MELANCON MESSRS. McLOUGHLIN, BARRANGER, PROVOSTY AND MELANCON Counsel for Chevron Chemical Company 720 Hibernia Bank Building New Orleans 70112 523-5116 Our LM0172 39a APPENDIX X IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 72-1025 WILLIAM F. COLE, Plaintiff-Appellant, versus CHEVRON CHEMICAL COMPANY - ORONITE DIVISION, Defendant-Appellee, MECHANICAL CONTRACTING ENGINEERS, INC., and LIBERTY MUTUAL INSURANCE COMPANY, Third Party Defendants- Appellees-Appellants. Appeals from the United States District Court for the Eastern District of Louisiana (April 23, 1973) Before GEWIN, GOLDBERG and DYER, Circuit Judges. DYER, Circuit Judge: Two questions are present- ed on appeal in this Louisiana-based diversity case: . ousk Kuoree - eae wees ive he Loa ae RAIMA Nt BN RAR FAIRS tT FORDE RR ORS IDS TDF ob? BAe SS hi Ores arabe (1) whether the work that Mechanical Contracting En- gineers, Inc., performed for Chevron at its plant in Belle Chasse, Louisiana, was, as a matter of lav, part of Chevron’s “trade, business, or occupation” for the purposes of establishing coverage under § 6 cf the Louisiana Workmen’s Compensation Statute, La. Rev. Stat. Ann. $ 23:1061;' and (2) whether in Lovisiana, an indemnity agreement that does not expressly speci- fy the indemnitor’s intent to indemnify for the indemni- ; tee’s own negligence is enforceable where the damage is caused by the concurrent negligence of the indemni- tee and indemnitor, rather than by the sole negligence 2 of the indemnitee. We affirm in part and reverse in part. hbk ES aioe Aa ear % tLa. Rev. Stat. § 23:1061 provides: Where any person (in this section referred to as principal) undertakes to execute any work, which is a part of his trade, business. or occupation or which he had contracted to perform, and contracts with any person (in this section referred to as contractor) for the execution by or under the contractor of the whole or any part of the work undertaken by the principal, the principal shal! be liable to pay any employee employed in the execution of the work or to his dependent, any compensation under this Chap- : ter which he would have been liable to pay if the 4 employee had been immediately employed by him; Z and where compensation is claimed from, or proceed- ings are taken against, the principal, then, in the application of this Chapter reference to the principal shall be substituted for reference to the employer, except that the amount of compensation shall be cal- culated with reference to the earnings of the employee under the employer by whom he is immediately em- ployed. Where the principal is liable to pay compensation under this Section, he shall be entitled to indemnity from any person who independently of this Section would have been liable to pay compensation to the employee or his defendant, and shall have a cause of 2 action therefor. YAS wa! Aa own Blok, Mobo lod She a 4la Mechanical was hired by Chevron to do general weld- ing and pipe fitting work at its Belle Chasse plant. The job primarily consisted of cutting and removing old pipes, valves, gratings, and other refinery parapher- nalia to make way for construction of additional facili- ties and installation of new equipment. In February 1968 Cole, a welder employed by Mechanical for the Chevron job, was injured during the course of his em- ployment at the Belle Chasse plant. He sued Chevron under the general negligence law of Louisiana for dam- ages he sustained as a result of his slipping and falling in a puddle of oil while he was helping a fellow em- ployee carry a heavy piece of steel grating. The puddle was comprised of both “old” and “new” oil; the new oil was spilled when Mechanical’s welders cut pipes containing the oil, but the old oil had been left from Chevron’s earlier operations. Cole contended that Chevron was negligent in that it breached the duty it owed him as a Mechanical em- ployee to remove old oil from the floor before Mechani- cal began working in the area and that Chevron’s fire- watcher breached his duty to clean up the spilled new oil. Chevron countered that it was Cole’s “statutory employer” within the meaning of La. Rev. Stat. Ann. § 23:1061 and that therefore Cole’s exclusive remedy for his injury was workmen’s compensation since un- der Louisiana law a workman cannot maintain a tort action against his statutory employer. La. Rev. Stat. Ann. § 23:1032. In response to Cole’s claim, Chevron also asserted a third-party complaint against Mechani- cal and its insurer, Liberty Mutual Insurance Com- pany, on the basis of a written indemnity agreement NEN AAY MOS thie Be FT AIA le ODN IE eh PS wre tn st SLE ie VB Nt 2d I RITES oe HEUTE OE ela, 42a between Chevron and Mechanical for the work being performed by Mechanical when Cole was injured. Prior to trial Chevron filed a motion for summary judgment supported by affidavits; the motion was granted and the suit dismissed. On appeal, this Court reversed that judgment and remanded the cause for trial on the merits because material factual issues re- mained to be tried. Cole v. Chevron Chemical Co,, 5 Cir. 1970, 427 F.2d 390. In so holding the Court pointed out that: In cases such as Arnold v. Shell Oil Company, 5 Cir., 1969, 419 F.2d 43, and Allen v. United States Fire Insurance Company, 222 So.2d 887 (La. Ct. App. 1969), the factual picture of the principal employer’s business operations, and of the part the activity in issue played in those operations, was well defined. Here, on the oth- er hand, the picture of Chevchem’s operations at its Oronite Division Plant is not clear. That Chevchem is engaged in the production of petro-chemicals derived from hydrocarbons is | not conclusive of the issue whether all types of welding work performed at its Oronite Divi- | sion Plant — demolition and construction work, as well as “repair” and “maintenance” work — are part of the “regular operations” . at the Plant. Further factual development is necessary. ... 427 F.2d at 394. 43a On remand, Cole’s suit against Chevron was tried in two parts. The first day of testimony related only to the issue of whether Chevron was the statutory em- ployer of Cole. This issue was submitted to the jury; it determined that the work for which Chevron con- tracted with Mechanical was not part of Chevron’s “trade, business, or occupation.” After the second phase of the trial was completed on the following day, a special verdict was rendered. The jury found that Cole was injured, that his injury was caused by the negligence of Chevron, that Cole was not contributorily negligent, and that he was entitled to damages of $67,500. Subsequently, Chevron filed a motion for a judgment notwithstanding the verdict and alternatively for a new trial. The district court granted the motion for a judg- ment N.O.V. and conditionally granted a new trial, contingent on the judgment N.O.V. not being affirmed on appeal. In the meantime, Chevron’s indemnity ac- tion against Mechanical was tried without a jury, and the district court held that Chevron was entitled to indemnification because Mechanical had been concur- rently negligent in that it had a contractual obligation to keep “a competent man in the vicinity ... to super- vise the work” and its personne] failed to call the spill- age of new oil to the attention of Chevron’s firewatcher. Reasoning that Cole’s injuries were therefore caused “directly or indirectly” (the words of the indemnity agreement) by Mechanical, the court concluded that Mechanical was bound to indemnify Chevron for any damages that it might owe Cole as well as for its costs of defense, which were stipulated to be $6,915. This Se ee ee Se i ” te eee _ 44a appeal by Cole on the statutory employer question and by Mechanical on the indemnity issue ensued. Was the Work Performed by Mechanical and Cole Part of Chevron’s “Trade, Business, or Occupation”? Section 6 of the Louisiana Workmen’s Compensation Statute, La. Rev. Stat. Ann. § 23:1061, provides that any person (referred to as a principal) who contracts out work which is a part of his “trade, business, or occupation” is liable for workmen’s compensation to any of the contractor’s employees who are injured while engaged in such work to the same extent as if the contractor’s injured employee were one of the prin- cipal’s own employees. In other words, under certain circumstances, the principal is considered to be the statutory employer of the independent contractor's employees for the purpose of establishing coverage un- der the Workmen's Compensation Statute. The purpose of this provision is to prevent the principal from evad- ing his workmen’s compensation responsibility by in- terposing an independent contractor between himself and employees who are actually utilized in perform- ing a part of the principal’s “trade, business, or occu- pation.” Cole v. Chevron Chemical Co., 5 Cir. 1970, 427 F.2d 390, 392; Arnold v. Shell Oil Co., 5 Cir. 1969, 419 F.2d 43, 46. Section 23:1061 benefits the emplovees of the contractor when the contractor is financially impoverished, because the principal may be held liable for their workmen’s compensation. “On the other hand, when the contractor is able to fulfill his compen- sation responsibilities, the provision operates to limit his employees to the maximum benefits payable under 45a the Workmen’s Compensation Statute, since the prin- cipal, as their ‘statutory employer,’ is, like the con- tractor, immunized from tort liability to the employees by the exclusive — remedy provision of that act. La. Rev. Stat. Ann. § 23:1032.” Cole v. Chevron Chemical Co., supra at 392-93. The standard for determining whether a given ac- tivity performed by an independent contractor is part of a principal’s “trade, business, or occupation” is, to a degree, dependent upon the factual context of the case. The Louisiana courts in the early cases of Sea- bury v. Arkansas Natural Gas Corp., La. App. 1930, 127 So. 25, and Dandridge v. Fidelity & Casualty Co., La. App. 1939, 192 So. 887, applied a two-pronged test based on business necessity and employment of simi- lar workers. However, keeping in mind the policy that workmen’s compensation law should be liberally con- strued regardless of whether the employer or employ- ee is the party asserting coverage, the Louisiana courts in Turner v. Oliphant Oil Corp., La. App. 1940, 200 So. 513; Thibodaux v. Sun Oil Co., La. App. 1949, 40 So.2d 761; Doucet v. W.H.C., Inc., La. App. 1968, 212 So.2d 267; and Allan v. United States Fire Insurance Co., La. App. 1969, 222 So.2d 887, retreated somewhat from this two-pronged test. In these cases the court held that the fact that the principal did not have any em- ployees engaged in a similar activity was not control- ling where the work contracted out was so necessary to the principal’s operations that, if it were not per- formed by the independent contractor, the principal would have to hire workers of its own to perform the task. PURINE BT EE iE BARS CS VER ONE REI PIR LEO, BF ATE a RE te PS 46a In Arnold v. Shell Oil Co., supra, the Fifth Circuit was confronted by an analogous factual situation. An employee of an independent contractor was injured while repairing a Shell heater-treater, which is a de- vice used to separate sand and salt water from fresh- ly mined oil. Shell had no workers employed on this job and, in fact, had always contracted out its heater- treater maintenance work. It was undisputed, how- ever, that the proper functioning of the heater-treater is necessary to the efficient operation of an integrated oil company, because the salt water and sand would corrode the pipeline if not removed before pumping the oil to the refinery. Based on these facts, the Court held that Shell was the injured employee’s statutory employer as a matter of law, concluding that to de- termine if an activity is part of a principal’s “trade, business, or occupation” for purposes of Louisiana’s Workmen’s Compensation Statute, the proper test is “whether the particular activity is essential to the busi- ness.” In so holding, the Court relied heavily on the rationale of the latter line of Louisiana cases that under such circumstances, the “fact that the employer or industry as a whole contracts out the activity is not controlling.” 419 F.2d at 50. Likewise, the panel of this Court that originally con- sidered the case sub judice when it was on appeal from the entry of summary judgment pointed out that simi- larly not controlling is the fact that the principal hires employees of his own to do work related to the activity being performed by the contractor’s employees. “In- stead, the decisive factors are the nature of the activity being contracted out, the nature of the principal em- ployer’s business, and the relationship between the Pinte Doge ot RE 47a particular activity and the broader business opera- tion.” Cole v. Chevron Chemical Co., supra at 394. Al- though the employment of similar workers is not con- trolling, where a principal in fact acts as his own gen- eral contractor or has a number of his own employees regularly performing a task substantially similar to the activity which he contracts out, the principal there- by affords a definite indication that the work engaged in by the contractor’s employees is part of his own trade or business. See La. Rev. Stat. Ann. § 23:1061, comment at 489-90; cf. Lutz v. Long-Bell Lumber Sales Corp., La. App. 1934, 154 So. 645; see also Horrell v. Gulf & Valley Cotton Oil Co., La. App. 1930, 131 So. 709. Indeed, in the recent case of Doss v. American Ventures, Inc., 1972, 261 So.2d 615, the Louisiana Su- preme Court held that American, the owner-lessor of a building that was nearly destroyed by a hurricane, was liable for workmen’s compensation to the injured employee of a contractor hired to rebuild the structure, on the ground that American was engaged in the con- struction business when the employee was injured since, at the time of the injury, American was acting as its own general contractor for the project. See also Gray v. Louisiana Power and Light Co., La. App. 1971, 247 S.2d 137, where the court held that, because LP&L acted as its own general contractor in erecting towers for power transmission lines, it was the statutory em- ployer of an injured worker employed by a sub-con- tractor hired to construct the foundation on which to erect the towers. In the present case, the general welding and pipe fitting work that Chevron hired Mechanical to do and that Cole was performing when injured was part of ~ wee Dette 2, I err> Sa ORE AS. > TESS ERE 4h ITS Hie me Ee AEDS Sith Te Ay + «tnt s 2 tee DP + 2% a-complex plan of expansion and renovation which Chevron established soon after the Belle Chasse plant was opened in 1943 and which proceeded rather con- tinuously over the following 26 years, dependent only on economic activity. Over 100 tanks, innumerable pipes, and various types of other equipment for pro- ducing petro-chemicals were added, and the value of the plant was increased some 25 times. Significantly, the expansion of the Belle Chasse facili- ties was always directly supervised by Chevron itself. The company employed a full-time maintenance crew of 35 men, each of whom were trained as welders and pipefitters and cross-trained as carpenters and elec- tricians. Depending upon the size of a particular proj- ect and the workload of the maintenance crew at the time, Chevron would either have its own staff do the construction and renovation work, or it would contract out part or all of the work. However, even when the work was contracted out, Chevron acted as its own. general contractor. Chevron’s engineers prepared the blueprints, planned the schedule for each project, co- ordinated the work schedules among the various proj- ects, and as the work progressed on each project inter- mittently made quality control tests. Below, the district court granted a judgment N.O.V. in favor of Chevron on the basis that there was no substantial evidence to support the jury’s verdict. The proper standard for granting a directed verdict. or judgment N.O.V., and for reviewing the granting. or denial of such motions on appeal, has been exhaus- tively explained in Boeing Co. v. Shipman, 5 Cir. 1969, 411 F.2d 365, 374-76. Basically, granting the motions 49a is proper when, viewing all of the evidence and all. of the reasonable inferences that can be drawn there-, from most favorably toward the party opposed to the. motion but without weighing the evidence or inferences and without determining the credibility of the witness- , es, the facts and legitimate inferences point so over- whelmingly in favor of the moving party that reason- | able men could not arrive at a contrary decision. Applying these principles to the instant case, we de- termine that the granting of Chevron’s motion for a: judgment N.O.V. by the district court was proper. The’ uncontroverted evidence conclusively established that anumber of Chevron’s full-time employees were regu- larly engaged in the same type of work as being per- formed by Mechanical and Cole, that Chevron had been in the process of modernizing and expanding its Belle Chasse facilities on a continuous basis for over a quart- er century, that throughout this period Chevron had as a matter of course acted as its own general contractor for the work which its own maintenance crew did not have the time to handle, and that Mechanical was but a sub-contractor on this project. Thus, as in Owen v. Kaiser Aluminum and Chemical Corp., 5 Cir. 1969, 417 F.2d 303, it is clear that La. Rev. Stat. Ann. § 23:1061 applies. Moreover, unlike the sugar refinery in Moak v. Link- Belt Co., La. App. 1970, 229 So.2d 395, the evidence here shows that Chevron could not have continued to operate its business indefinitely without completing the expansion and renovation work undertaken by Me-. chanical. The uncontroverted testimony of the opera- 50a tions manager of the Belle Chasse plant, Mr. Estopin- nal, which was the only relevant evidence regarding the necessity or essentiality of Mechanical’s work for Chevron, was to the effect that, although Chevron pre- sumably would have been able to continue its opera- tions at the plant for the time being without the work being done, the modernization and expansion of the Belle Chasse plant would somehow have been finished — even if Mechanical had refused to perform under the terms of the contract — because the work was essential to the plant’s continued efficient and competi- tive operation. In short, we agree with the district court that there was no substantial evidence to support the jury’s find- ing that the work which Mechanical was hired to do was not part of Chevron’s “trade, business, or occupa- tion.” Even when the record is viewed in the light most favorable to Cole, the evidence that Chevron is Cole’s statutory employer is completely overwhelming; we cannot conceive how reasonable men could reach a different conclusion. Contractual Indemnity. The only other issue on appeal, involving Chevron’s third-party complaint against Mechanical, is whether under Louisiana law indemnity is owed when the in- demnitee is wholly or partially at fault and the indem- nity agreement fails to expressly require indemnifica- tion for accidents resulting from the indemnitee’s neg- ligence. A careful review of the relevant Louisiana cases convinces us that indemnity is not owed in sucn a situation. ee 5la The pertinent contractual provision between Chev- ron and Mechanical was: General Liability: CONTRACTOR shall in- demnify and save COMPANY harmless from and against any and all loss, damage, injury, liability, and claims thereof for injuries to or death of persons, and all loss of or damage to property of others, resulting directly or indi- rectly from CONTRACTOR’S performance of this contract. Based on a finding of concurrent negligence on the part of both the indemnitor, Mechanical, and the in- demnitee, Chevron, the district court held that Chev- ron was entitled to indemnity under the agreement. Since Mechanical’s negligence partially caused Cole’s accident, the court reasoned that his consequent in- juries were embraced by the phrase “resulting directly or indirectly from CONTRACTOR’S performance.” We disagree. Louisiana law is clearly to the effect that the failure of the parties to refer expressly to “neg- ligence” in an indemnity contract is evidence of the parties, intention not to provide indemnification for the indemnitee’s negligent acts. Bagwell v. South Louisi- ana Electric Co-op Assoc., La. App. 1969, 228 So.2d 599; Arnold v. Stupp Corp., La. App. 1967, 205 So.2d 197; see Plantation Pipeline Co. v. Kaiser Aluminum and Chemical Corp., La. App. 1969, 222 So.2d 905; Ele- phant, Inc. v. Hartford Accident & Indemnity Co., La. App. 1968, 216 So.2d 837; Brady v. American Insurance Co, La. App. 1967, 198 So.2d 907. The parties’ clear and unequivocal intent to indemnify against damages RAE DOE BOIS LT BRET AIT IG IIT LOLS TEL LEI AL EE LILLE ALLEL LIA OE ADE SELL De 52a caused solely by the indemnitee’s own negligence must be expressly articulated by specific reference to “neg- ligence.” Otherwise, the presumption is that the in- demnification is applicable only to vicarious responsi- bility of the indemnitee resulting from negligent acts of the indemnitor. Bagwell v. South Louisiana Elec- tric Co-op Assoc., supra; Arnold v. Stupp Corp., supra. Garsalitz v. Olin Mathieson Chemical Corp., 5 Cir. 1970, 429 F.2d 1033; and Grigsby v. Costal Marine Service of Texas, Inc., 5 Cir. 1969, 412 F.2d 1011. Compare Jen- nings v. Ralston Purina Co., La. App. 1967, 201 So.2d 168. These same precepts and presumptions are equally applicable where the damage is caused by the concur- rent negligence of the indemnitee and indemnitor, rather than by the indemnitee’s sole negligence. In the recent case of Strickland v. Nutt, La. App. 1972, 264 Sa.2d 317, which involved a finding of concurrent negligence and an indemnity agreement remarkably Similar to the one in the case sub judice, the Louisiana court specifically rejected the district court’s decision below in the present case, Cole v. Chevron Chemical Co., E.D. La. 1971, 334 F.Supp. 263, and denied indemni- ty. We reject the proposition that indemnity con- tracts should be interpreted differently de- pending on whether the indemnitee is solely negligent or there is concurrent negligence on the part of both indemnitee and indemnitor. We are aware of the case of Cole v. Chevron Chemical Company-Oronite Division, 334 53a F.Supp. 263 (U.S.D.C., E.D. La. 1971) wherein the Federal District Judge indicated that the holding of Jennings v. Ralston Purina Co., 201 . §o.2d 168 (La. App. 2d Cir. 1967) and Arnold v. * Stupp Corp., 205 So.2d 797 (La. App. Ist Cir. 1967) were applicable only where there was sole negligence on the part of the indemnitee. We agree rather with the language of the US. Fifth Circuit Court of Appeals in Transconti- nental Gas Pipe Line Corp. v. Mobile Drilling Barge, 424 F.2d 684 (1970) that, “Although in Batson-Cook [Batson- Cook Company v. Industrial Steel Erec- tors, 5 Cir., 257 F.2d 410] the indemnitor was not negligent and the damage was caused solely by the negligence of the in- demnitee, the rule requiring specificity of the intent to indemnify for the indemni- tee’s own negligence is equally applicable in situations where, as here, the concur- ring negligence of the indemnitee and in- demnitor causes the damage. See United States v. Seckinger, 5 Cir. 1969, 408 F.2d 146, reversed on other grounds 397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224 (October 13, 1969).” We are of the opinion that the above language sets forth the better rule for interpreting in- demnity agreements and that the Courts of this state should adopt that rule. ... 264 So.2d at 323. RENEE APPLET Se BS EI A OE OE Ee EES 54a Accordingly, because the jury found that Cole’s in. juries were proximately caused by Chevron’s negli- gence and since the indemnity agreement does not use the talismanic word “negligence” or otherwise make unequivocally clear the parties’ intent to indemnif, for injuries caused, in part or in whole, by the negli- gence of the indemnitee, we conclude that Chevron is not entitled to recover under the indemnification provision of the contract. The district court’s judgment N.O.V. in favor of Chevron is affirmed. The judgment of the district court that Mechanical must indemnify Chevron for its costs of defense and for any damages owed to Cole as a result of the injuries he sustained at the Belle Chasse plant in 1968 is reversed with directions to enter judg- ment for Mechanical. AFFIRMED IN PART AND REVERSED IN PART. 55a APPENDIX XI IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT October Term, 1972 No. 72-1025 D. C. Docket No. 68-1943 Sec “C” WILLIAM F. COLE, Plaintiff-Appellant, versus CHEVRON CHEMICAL COMPANY - ORONITE DIVISION, Defendant-Appellee, MECHANICAL CONTRACTING ENGINEERS, INC., and LIBERTY MUTUAL INSURANCE COMPANY, Third Party Defendants- Appellees-Appellants. Appeals from the United States District Court for the Eastern District of Louisiana Before GEWIN, GOLDBERG and DYER, Circuit Judges. gs kro ts Bae Soe: 56a JUDGMENT This cause came on to be heard on the transcript of the record from the United States District Court for the Eastern District of Louisiana, and was argued by counsel; ON CONSIDERATION WHEREOF, It is now here ordered and adjudged by this Court that the judgment of the said District Court in this cause be, and the same is hereby, affirmed in part and reversed in part with directions to enter judgment for Mechanical in ac- cordance with the opinion of this Court; It is further ordered that defendant-appellee pay to third party defendants-appellees-appellants, Mechani- cal Contracting Engineers, Inc., the costs on appeal to be taxed by the Clerk of this Court. April 23, 1973 Issued as Mandate: 57a APPENDIX XIl IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 72-1025 WILLIAM F. COLE, Plaintiff-Appellant, versus CHEVRON CHEMICAL COMPANY - ORONITE DIVISION, Defendant-Appellee, MECHANICAL CONTRACTING ENGINEERS, INC., and LIBERTY MUTUAL INSURANCE COMPANY, Third Party Defendants- Appellees-Appellants. Appeals from the United States District Court for the Eastern District of Louisiana ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC (Opinion April 23, 1973, 5 Cir., 1973, ___ F.2d ——_). (June 19, 1973) Before GEWIN, GOLDBERG and DYER, Circuit Judges. UNSERE NE ALON AER PNT ek EP MEENA CO RPE te ETA NOEL ince NNN DENCE 9 By SOP RETE ONS ACT AD EA 58a PER CURIAM: The Petition for Rehearing filed on behalf of Chevron Chemical Company — Oronite Dj. vision, is DENIED and no member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Proce. dure; Local Fifth Circuit Rule 12) the Petition for Re. hearing En Banc is DENIED. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_0611%3A1. Public record. Not legal advice.